Top Tips for Buy to Let Investors


Research the Area

We recommend that you do your homework on your area and not just the properties. Look at average incomes or wages. For example, in Maidstone the average income is £27,000 pa. With around 30-35% of this allocated to rent, means that average rents will be circa £9,450 pa maximum or £675-£787 pcm. This is a good rule of thumb to consider how lettable your property will be.

Avoid the Voids

This is the most important phrase for an investor. The void is the period when your property is empty, so not income producing, but still costing you money, perhaps with mortgage payments coming out too! If you work on the above formula your property will be affordable to the average income and so will let more readily with the tenant less likely to default.

Know what you want from your investment

Do you want capital growth or the highest monthly income relative to your capital outlay known as “Yield”. This will impact your purchase. Houses generally give the best capital growth or increase in market price or value, apartments or flats the highest yields.

Look at the long term

It will serve you well to remember that property investment generally is a long term game. So consider your investment over a 10 year period rather than the short term fluctuations. If your rental income increases by 5-6% per annum and your capital growth is around 2-3% per annum, then this could give you a total return over a 10 year period of 80-90%.

Buy with your head not your heart

Do not buy what you want to live in, as you would your home, but equally ask yourself, would you live there if you had to? This will indicate its marketability. If you’re seeking capital growth, then remember new builds will not offer this for the first few years, however, they do offer a lower maintenance option with new build guarantees which can save headaches.

Do not fall foul of the regulations

Residential letting is heavily legislated and this is constantly being revised and updated. Make sure you know what is required and if you use a letting agent rely upon them to keep you updated and make sure you remain compliant.

This is your business

Do not become friends with your tenants, keep it on a formal footing, as this makes it easier if anything goes wrong or you need to regain possession. Alternatively, use an agent to act as a buffer between you and your tenant.

Professional Agents

If you decide to use a letting agent, make sure they are members of a professionally body such as the Association of Residential Letting Agents or the Royal Institution of Chartered Surveyors. These bodies regulate their members and ensure that they are trained and knowledgeable and, in the case of the RICS, they audit their accounts periodically to ensure your money and your tenant’s is safe. Their cost will seem good value if you do have the misfortune to run into any difficulties with your tenant.